Feature Stories

18.10.2017

Family Affairs: Common Threads of Four Family Business Leaders

Family business is a catch-all term covering enterprises that vary widely in size, generation and purpose. They may also be organized around a range of governance and management structures. The balance between ownership and management, and the degree to which individual family members are involved, may differ. Meanwhile, the relative value and weighting assigned to family interests and business interests is probably unique in each case. But along with the differences there are, of course, common threads in their practices and philosophies.

Passing on a family’s values

Values are the cornerstone for life, and offer the meaning of existence as a family. Successful families demonstrate how values guide them to make fundamental decisions, now and across generations.

In his role as the Chairman of Jebsen and Co, Dr Hans Michael Jebsen strives to live up to a number of key family values. These include a commitment to the long-term future of the company, acceptance of one’s responsibility to those dependent on its ongoing success, and an appreciation of the need to contribute something of value to the wider community.

Dr Jebsen believes the only way these values can be passed on to the next generation is by example. “You can’t clone people, and you shouldn’t try to. Every generation should develop its own ideas. But without values, everything eventually becomes worthless.”

The philanthropic work of RGE owner Mr Sukanto Tanoto, and his wife Mrs Tinah Bingei Tanoto, began in Indonesia in the 1980s. Mr Tanoto says his children were involved in the family’s philanthropy, as well as its commercial activities, from a young age.

“One of our family values is gratitude,” he says. “We believe we should always feel grateful for what we have, and contribute back to society and to those who haven’t had the same good fortune.”

The Tanoto Foundation was established in 2001 to more effectively express this value. “Today our next generation is active in personally overseeing and participating in the Tanoto Foundation’s programs,” Mr Tanoto says.

Successfully handling diversity

Diversity in a family business is a natural phenomenon, but this can be the breeding ground for conflicts if not well managed. Leading family businesses can embrace diversity and find ways to turn this into a competitive edge.

Mr Max Ma, the Chairman of the Lee Heng Diamond Group, has eagerly embraced the new skills, and backed the fresh ideas, of his family’s next generation.

While he sees their talents as vital in a digital future, Mr Ma believes that, within a family, one should find the commonality and accept the diversity. “It’s important to complement each other and the mission of the family,” he says. “Sometimes the hardest thing has though been to stand back and keep your mouth shut, just so they (the younger generation) can make their mistakes.”

As a family venture evolves into a multi-generational enterprise, they may need to develop a system to address the diversity. The Lee brothers - members of the fourth generation of the Lee Kum Kee - felt a lack of freedom to develop their own ideas, which led to a decision to diversify the company’s activities in the early 1990s. The scope, which has allowed the brothers to more fully use their skills and initiatives, has seen the business subsequently go from strength to strength.

“If we didn’t diversify and allow each of us to go out and do things, and if we didn’t set up the Family Council in 2002, we would not be able to do what we are doing right now,” Mr David Lee, Director, Lee Kum Kee Company Limited, explains.

Equally significant for Mr Lee have been the steps taken to develop much warmer personal relationships within the extended family, through its social and philanthropic activities. “Not all family members will be actively involved in the business, but they no longer have to feel left out,” he says.

Responding to a paradigm shift

For family businesses spanning generations, change and disruption is nothing new – even if the current advances in digital technology are proving uniquely revolutionary.

In the late 1980s, Mr Ma saw which way the wind was blowing and diversified the family’s still successful diamond importing business by establishing the MaBelle chain of stores to sell relatively low-cost jewelry. Once again trying to ensure the family stay ahead of the curve, Mr Ma’s son and daughter launched the tech-focused company CoCoon in 2012, to cultivate Hong Kong’s startup community.

Though its roots were firmly in maritime trade, the Jebsen Company has adapted to a changing world and is now involved in activities that range from mining to manufacturing. “When we sold our shipping company after over 100 years involvement, that was not an easy decision,” Dr Jebsen admits. “There was no doubt an emotional attachment, and our identity hinged to a large degree on shipping.”

“Constant entrepreneurship” in the Lee family sets their way to navigate through the digital revolution. Their governance structure prepares them for change across generations. “Our past is not equal to our future. But we have the structure in a good shape and the feedforward loop necessary to tell us how we should respond to the paradigm shifts,” Mr Lee says.

Even in philanthropy, families need to go with the tides. Children of Mr Tanoto bring to his awareness, the evolving societal needs and ways to measure impacts of their philanthropy. “In addition to community, country, and company which concern me most, my next generation points to the importance of climate and customer. We now turn from 3Cs to 5Cs.”